Season's Greetings

Happy New Year and Merry Christmas

Շնորհավոր Նոր Տարի եւ Սուրբ Ծնունդ

Armenian Economic Association 2013 Conference October 19-20

The Armenian Economic Association 2013 conference will be jointly hosted by Yerevan State University (YSU) and the American University of Armenia (AUA) on October 19-20, followed by a workshop on the state of art in public finance at the Central Bank of Armenia (CBA) on October 21, 2013. The language of the conference is English and Armenian, and sessions are organized by language and field.

The Conference brings together academics and researchers from Armenia, Czech Republic, Georgia, Germany, Italy, Spain, United Kingdom, and the United States. Presentations over the two days include over 40 papers which address topics in international trade, economic development, macro and microeconomics, migration, finance, political economy and public finance, energy, and labor markets among others. The conference is preceded by a reception at the Akian gallery, at AUA, on October 18th.

The keynote speakers are (1) Daron Acemoglu (via video conference), Elizabeth and James Killian Professor of Economics at Massachusetts Institute of Technology, and (2) Mark Davis, Head of EBRD office in Armenia.

The conference is in part sponsored by Yerevan State University, the American University of Armenia, the Central Bank, and the USAID/EDMC program. Registration is free. For more details, please visit the conference homepage at http://aea.am/conferences.html, and follow AEA on https://www.facebook.com/ArmenianEconomicAssociation.

Construction sector yet to recover

The construction sector has yet to recover from the collapse in the aftermath of the global crisis. For this year through August, construction activity declined by close to 11 percent when compared to the same period in the previous year. It stood at USD 471 million, compared to a peek of near 3 billion in 2008.
The economy has been recovering at a rate that surpasses those experienced by a number of European and developed economies; 3.8 percent growth rate year through August. Yet this rate is well below the experience prior to the crisis. Can the economy recover and grow at its past trajectory without the recovery of the construction sector?

Armenian Economic Association 2013 Conference

The Armenian Economic Association 2013 meetings will be jointly hosted by Yerevan State University and the American University of Armenia on October 19-20, followed by a workshop at the Central Bank of Armenia on October 21st.

Scholars, graduate students, and researchers are invited to present their research in all areas of economics. Papers may address the European sovereign debt crisis, the aftermath of the global financial crisis, growth and development issues in Armenia and the South-Caucasus, regional trade patterns, or any other topic representing current advances in economics. Both theoretical and empirical works are welcome. The language of the conference is Armenian and English, and sessions will be organized by language and JEL fields below:

• Microeconomics; Industry Studies
• Macroeconomics and Monetary Economics
• International Economics
• Financial Economics
• Public Economics
• Labor and Demographic Economics, Health, Education, and Welfare
• Growth, Economic Development, and Transition Economics
• Agricultural, Natural Resources, and Environmental Economics
• Urban, Rural, and Regional Economics

If interested, please submit an abstract at http://aea.am/conferences.html, or alternatively email it to aea2013[at] aea.am by July 30th. Submitted abstracts should be less than 500 words and include: title of paper, name(s) of author(s), affiliation, current position, an email address, and at least one keyword. In the abstract, please identify the research question, methods, and outcomes (obtained or expected). Authors will be informed of the acceptance of their proposals by August 15th, 2013.

There is no submission fee nor any cost to present and participate.

Canadian Economic Association 2013 Conference

I am attending the Canadian Economic Association 2013 conference which is being held at the University of Montreal on May 30-June 2. The conference homepage is http://economics.ca/2013/en/index.php  and the preliminary program is directly available at  http://economics.ca/2013/en/program.php.
Would love to meet old friends and make new ones perhaps at the reception on Friday evening (or before/after). Drop me a note if interested.

AIPRG conference on economy of Armenia

AIPRG will hold its conference on the economy of Armenia on June 1-2, 2013, simultaneously in Washington, DC, and Yerevan.
Advanced registration is recommended.

Dollarization of bank loans in Armenia

Armenia's economy witnessed significant dedollarization for much of the past decade, that is until it was hit hard by the unravelling global financial crisis. The foreign exchange (FX) share of commercial bank loans to private non-financial businesses declined from the mid 70s down to 50 percent by early 2007. More impressively, the FX share of loans to households declined from about 90 percent down to 20 percent in summer of 2008.


By the first quarter of 2009, the FX share of loans to both businesses and households reversed its trend. The business share is now in the mid 80s, whereas that of households has risen to the mid 30s only, as illustrated in the figure below.

I am sure that it will take some time to reverse this pattern. But in the mean time, this is likely to add to the risk (foreign exchange) of doing business in Armenia, in particular for those with Dram denominated earnings and loans in a foreign currency.


FX share of commercial bank loans to households and private non-financial businesses: Jan 2000-Feb 2013

 Data can be downloaded from here (xls).

Armenia's stubborn trade gap

Armenia's trade gap widened over time, exploding in the years of 2006-2008. While imports and exports shrank in the aftermath of the global financial crisis, a pattern consistent with the Great Trade Collapse, both roughly converged in 2012 to their pre-crisis levels. Yet, the gap remains stubbornly high and accounts for some 28 percent of GDP.
How much of this is explained by the uncompetitiveness of the country (high wage and effective exchange rates), or by the local appetite for foreign made goods? Is import substitution a promising route for growth, and can the country compete with the emerging economies?



Exports and imports in USD millions


In 2012, goods and services from the EU accounted for 27 percent of imports, Russia for 25, China for 10, and the BRICs for a combined 38 percent.

A Blessed Easter

Christ is risen from the dead. Blessed is the resurrection of Christ.

Քրիստոս յարեաւ ի մեռելոց՜ Օրհնեալ է Յարութիւնն Քրիստոսի՜
Kristos haryav ee merelots. Orhnial e Harutiunn Kristosi.

The number of Armenian citizens visiting Turkey

The number of Armenian citizens visiting Turkey has increased over the years. It has grown from about 5000 in the mid 1990s to about 70000 in recent years. But notwithstanding this dramatic growth, the number of visits pales in comparison to the pattern observed for visitors from countries in the region.



Arrivals in Turkey


For the years 1996 through 2012, the number of Armenians arriving in Turkey generally surpassed the number departing; exceptions are 2001, and 2006-2009. The cumulative number of arrivals, net of departures, a proxy for those who may have stayed behind during this period, is about 15000. To the extent that this figure does not include those who may have arrived between 1992 and 1995, 15000 may be an underestimate of how many Armenian citizens live in Turkey today. On the other hand, it may overstate the actual figure to the extent that it does not control for the possible illegal crossings into Europe; some 55,000 would-be immigrants from various nationalities illegally crossed into Greece from Turkey in 2011 (The Economist).



Arrivals in and Departures from Turkey


A glance at the figures reveals a pattern of travel to Turkey that is unique to those from Armenia. In particular, one cannot help but notice the precipitous decline in 2001 that may have begun in 2000. This pattern can be explained by the reaction of the government of Turkey to the Armenian Genocide affirmation efforts in the US in late 2000, and the official recognition in France in 2001. Unable to lash out at the US and France, it tightened visa requirements on the citizens of Armenia. In effect, it lashed out at the weakest and poorest members of the Armenian society, the desperate migrant workers and those engaged in suitcase trade.


Arrivals in Turkey by Air and Land



The reasons for traveling to Turkey have evolved over the years, and more and more of Armenia's citizens are vacationing in Turkey and touring its historic sites. In recent years, and per Turkstat, some 8000 flew to the resort town of Antalya in Turkey.

Rapid Economic Growth?

The economy continued its steady growth form the collapse in 2009 when it shrank by 14.1 percent, hit hard by the global financial crisis. It grew at an annual rate of 8 percent for the first two months of this year, following a GDP growth of 7.2 percent in 2012.
The construction sector continues to drag the economy and declined at an annual rate of 8 percent. In contrast the industrial sector more than offset this reduction by expanding by 16 percent.
While growth through February is very promising, is Armenia in a full recovery mode from the 2009 crisis and how badly will it be impacted by the ongoing rolling crises in a number of European countries?

CFP -- Armenian Economic Association 2013 Conference

The Armenian Economic Association 2013 meetings will be jointly hosted by Yerevan State University and the American University of Armenia in Yerevan on October 19-20, 2013.

Scholars, graduate students, and researchers are invited to present their research in all areas of economics and finance. Both theoretical and empirical works are welcome. The language of the conference is Armenian and English, and sessions will be organized by language and field.

Abstracts should be less than 500 words and include: title of paper, name(s) of author(s), affiliation, current position, an email address, and at least one keyword. In the abstract, please identify the research question, methods, and outcomes (obtained or expected) of the research. Deadline for abstract submissions is June 30th.

For submissions and conference information, visit http://aea.am/conferences.html.
Direct link for abstract submissions here.
Contact: annual2013 [at] aea.am

Armen Alchian (April 12, 1914 – February 19, 2013)

via Marginal Revolution by Alex Tabarrok on 2/19/13

Armen Alchian has died. Alchian was both clever and wise, an unusual combination. His 1950 paper Uncertainty, Evolution and Economic Theory applied basic insights from evolutionary theory to suggest new approaches to economic ideas. Alchian, particularly with Demsetz, began the analysis of property rights not only what property rights do but how they evolve with changing circumstances (the link goes to Alchian’s entry on this topic in the CEE). Alchian’s textbook with Allen, University Economics which became Exchange and Production, is a classic; never a bestseller among students but avidly read by masters. The Alchian-Allen theorem, sometimes called the third law of demand, continues to bedevil theorists despite its simplicity. I am a fan of his paper Costs and Outputs which generalized some ideas about production and time and inspired Fisher Black. I never met Alchian but have always profited from reading his papers and I was truly grateful and also thrilled when he blurbed my book Entrepreneurial Economics. Fred McChesney has a good appreciation including Alchian’s pioneering event study which was suppressed for national security reasons; Bob Higgs remembers Alchian’s legendary class at UCLA and here is Larry White interviewing William Allen about A Life Among the Econ his memoir of UCLA economics during its glory years.

You can find all of these works and more in Alchian’s Collected Works.

Incorporations after the Global Crisis

Armenia was particularly hit by the global financial crisis. As gleaned from the number of newly registered corporations (limited liability), Armenia has yet to fully recover. Georgia was badly impacted as well, but is making a nice recovery. Other countries too have yet to fully recover as shown in the figures below from a newly released World Bank dataset on entrepreneurship in 130 countries.

Source: extracted from xls spreadsheet downloaded from http://www.doingbusiness.org/data/exploretopics/entrepreneurship. Thank you Shushan for sharing it.